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Accountants say PDS is good for business

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Accountants say PDS is good for business

Accountants say PDS is good for business

PDS has been good news this far for most dentists according to members of NASDA, the National Association of Specialist Dental Accountants. Despite significant regional variations, results from many hundreds of practices around the UK build a positive national picture.

However, those who went in to PDS later appear not to have secured such profitable arrangements and practice-owners have fared better than associates, for whom there is now less certainty. There are also indications that a good PDS contract does not add to the Good Will value of the practice.

NASDA has a membership of more than 30 specialist dental accountants around the UK who between them serve 5,000 dentists, one sixth of the UK’s dentists. Alan Suggett a NASDA member in the Newcastle office of Baker Tilly, said: ‘Initially contract offers made to clients were either good, very good, or absolutely amazing! Until recently I did not have a single client who was unhappy with the financial arrangements offered.’

Nick Ledingham, from Morris and Co in Cheshire, agrees: ‘So far as I am concerned, other than associates, there are certainly no losers. There may be principals who are getting less generous PDS contracts than others, but I do not have any clients at all who have lower profits under PDS, and indeed there are quite a number of examples amongst my own clients of profit levels increasing by 25% as a result of the PDS contract.

‘I think the people who are really benefiting are the people who got in early with a very generous contract which will not now be altered for three years.’

He continued: ‘I am seeing more and more difficulties with associates who are new to practices getting PDS contracts - in fact I think I am beginning to see a trend of the average gross being offered to associates falling under PDS and so new associates will not be able to get the same level of profitability as existing associates.’

Frances Clark of Dodd Accountants is also based in the north but there the perspective is very different. ‘What we have been seeing in Cumbria is a very significant shift towards private work. A number of practices have greatly reduced their NHS commitment. Having become increasingly disillusioned with what the PCT are proposing to offer for a fixed contract, they are moving into private schemes in order to be able to reduce the pressures of the workload and maintain their income.’

She added: ‘Even dentists who have previously been very committed in principle to the provision of NHS dental services are now reaching the conclusion that too much is being asked of them and so they are going private. For the cynics who believe the hidden agenda of the DoH is to take dentistry out of the NHS, the progress on the new contract certainly seems to be having the desired effect in Cumbria.’

In the South of England there appears to be more of a ‘wait and see’ attitude, according to Bob McTear a senior partner in Humphrey and Co. His firm, based in Eastbourne, represents more than 300 dentists across the South and he reports that about 5% have agreed a contract that they are happy with. ‘The rest are just waiting to see what happens with the GDS contract next April. We would say that all these clients are wary of PDS and don’t want to commit at this stage. Generally there has been a poor take-up of PDS by South-East practices.’

‘At the moment very few of our clients are despairing but are ready to go fully private if the NHS demands are too high. They are particularly concerned about the situation where activity targets are not met through no fault of their own. (e.g. loss of associate, sickness)

Our prediction for 2006 is that general practices will be:

• Getting to grips with either the new PDS or GDS contract• Worrying about achieving the activity targets• Trying to deal with PCTs who will have little knowledge of dentistry.

Meanwhile, he said, newly qualified dentists would be:

• Concerned about opening squats as PCTs are likely to have placed all activity with existing dentists• Trying to find a practice with a realistic NHS target as their inexperience may cause problems with meeting the activity expected• Looking to buy practices but being mindful of any under-achievement by the current principal and the solidity of the contract with the PCT.

David Griffiths of solicitors Maxwell, Entwistle and Byrne in Liverpool is an associate member of NASDA and he said that practices with PDS contracts were not attracting a premium. If anything, buyers were more cautious, anticipating that contract levels would be reduced if performance targets were not met.